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CUSTOMER LOYALTY

Consumers are less loyal than before the pandemic, study finds

By our News Team | 2022

More than a quarter of those surveyed said they were ‘less loyal’ now, and researchers warn that ‘habit’ is not ‘loyalty’.

Joint research by two UK companies has revealed the surprising impact of the pandemic on customer loyalty. 

The report, titled ‘The Loyalty Paradox’ shows that brand loyalty became a thing of the past last year with over a quarter (27.4%) of UK and US consumers showing no ‘brand loyalty’ at all across any sectors.

First-party customer data specialists Edit, and digital transformation consultancy Kin + Carta, published their joint report recently.

Two thousand respondents, split equally between the UK & US, were asked multiple-choice questions relating to loyalty, personalisation and customer experience, across a broad range of sectors.

Customer Loyalty

Image by Gerd Altmann from Pixabay

E-commerce scored particularly poorly, with only 6% of consumers claiming loyalty to brands within that vertical. As the lowest scoring online segment, e-commerce brand loyalty was below that of finance (9%) and offline retail – food and drink (21.5%).

Rob McGowan, Joint Managing Director at Edit comments: “These results suggest that while the e-commerce sector boomed during the pandemic, brands would be wise not to confuse habitual purchasing with perceived loyalty.”

Outside of e-commerce, loyalty towards financial products increased with age and, unsurprisingly, with those who have a high income of £75 000-plus (US$101 000-plus). Over 20% of respondents in this income bracket claimed loyalty to brands within the sector.

In a digital-first customer journey, rewards are most likely to drive the sharing of personal data across demographics. A total of 43% of respondents suggested ‘a discount code or incentive’ would persuade them to sign up to brand communications.

Gen Z consumers like the idea of ‘exclusivity’

A quarter (25%) would like ‘exclusive products or first opportunity to purchase’, while Gen Z consumers saw ‘exclusivity’ as particularly appealing, with nearly a third (30%) interested in ‘first opportunity to purchase’.

Receiving rewards were seen as an appropriate trade-off for sharing personal information, but more pragmatic considerations still remain the most important consideration to younger audiences. Operational and customer service communications outweighed rewards as a ‘return factor’ for younger generations. 

In all, 34% of Gen Z respondents and 32% of Millennials said that they would be ‘deterred from making another purchase if they cannot contact customer services via their preferred method’.

McGowan continues: “Brands cannot rely on loyalty anymore. Brand affinity through emotional connection has weakened to be replaced by habitual ties based on lived and related experience with brands and retailers.

“Brands therefore need to ensure that they look at the individual customer, and how they interact with the business to understand their behaviours and encourage habitual purchasing. 

He adds: “Brands should be looking at the customer journey as a whole, as well as spotting opportunities to innovate through data. Do it right, and there is an opportunity to retain more customers, as well as bringing in new ones”.

Karl Hampson, Chief Technology Officer for Data & AI at Kin+Carta, concludes “Our research shows that brands must not confuse repeat purchasing with ‘loyalty’. Instead, they should balance repeat transactional activity with how engaged the customer is across all interactions.

“Data will be key to this holistic measure, but equally brands must invest in the capabilities to understand the human behind the data. This means making data more accessible, insights easier to unlock and bringing your customer experience and data teams closer together so a shared understanding and strategy can be achieved.”

Read the full report here: https://edit.co.uk/customer-journey-research-report/

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